District of Columbia Water and Sewer Authority

Testimony as prepared for delivery

Introduction

Good afternoon, Chairperson Wells and members of the Committee on Public Works and Transportation. My name is George Hawkins, and I am general manager of the District of Columbia Water and Sewer Authority - or DC Water.

I want to re-introduce our Chief Financial Officer, Olu Adebo, who joins me here at the table. We also have with us Len Benson, our chief engineer; Alan Heymann, public affairs director; Yvette Downs; budget and finance director; and Kim Turner, government relations director.

As I shared with you during my last appearance before this committee in February, my agency is responsible for the fundamental health and wellbeing of more than 16 million people who live, work and visit in the District of Columbia every year. There is no overstating the seriousness of the task, and I'm proud to represent DC Water in any legislature at any time. To that end, thank you for the opportunity to testify today.

As you know, the budget process for DC Water is different from that of other District agencies by virtue of our enabling legislation. In compliance with that law, DC Law 11-111, we have transmitted our proposed Fiscal Year 2012 budget through the Office of the Chief Financial Officer and submitted it to the Mayor, for inclusion in the District's annual budget submission to Congress.

We have also delivered a copy of our printed "Budget in Brief" document to your office and all Council offices, along with a USB flash drive containing our complete operating and capital budgets, our 10-year capital improvement plan, and our 10-year financial plan. We also provide all of these materials on our website, www.dcwater.com. You'll be happy to know that in keeping with sound environmental and fiscal principles, we have printed only 50 physical copies of our budget book this year.

What you have before you is a proposed operating budget for Fiscal Year 2012, which begins in October, of $422.4 million. This represents a $19-million increase over Fiscal Year 2011, most of which comes from increased costs in debt service. Our rate proposal takes the average residential customer bill up $6.50 a month - to $66.79.

Our capital improvement plan calls for spending $3.8 billion over the next 10 years, the bulk to projects covered under environmental mandates or designed to avert calamity. These include our long-term control plan, now called the Clean Rivers Project, which will nearly eliminate combined-sewer overflows into the Anacostia and Potomac Rivers and Rock Creek. We hope to break ground on the first tunnel this spring, along with our new digester. This latter project will turn waste into fuel, making DC Water the largest generator of renewable electricity in the metropolitan area. This project will generate enough clean energy to power the equivalent of 26,000 homes and reduce our carbon footprint by 40 percent.

The Enhanced Nutrient Removal program will cost nearly a billion dollars, and will help us meet our newest federal permit requirements for nitrogen to protect the Chesapeake Bay.

The remaining capital spending goes to water and sewer infrastructure. This will allow us to replace our water mains - the median age of which is 77 years old. Some pipes in the District went into the ground before the Civil War.

I do want to take this opportunity to point out some good news about our infrastructure. The independent Insurance Services Office (or ISO) recently rated the District's water supply system as Class 1 for fire protection - the highest possible rating. This puts us in the very top of more than 48,000 fire protection districts in the country. The Fire Department received a very high rating as well, and we look forward to working with Chief Ellerbe to make the already-strong coordination between our departments even stronger.

The resources we need will have an impact on planned and future rates. No increase in rates is a welcome one, especially in trying economic times. But the cost of maintaining and replacing our aging infrastructure continues to rise and federal mandates and regulations continue to increase in number and cost, while the available federal funding is actually decreasing. You may have seen news reports this week that federal appropriations to DC Water are on track to be cut yet again.

The Board proposed this budget in February. As you know, we are in the midst of a lengthy public input process, including town hall meetings in every ward and meetings with many business and civic groups. As you saw during our Ward Six meeting on March 17, our customers are attending in healthy numbers and asking engaging questions. Following a public hearing May 11, the Board will vote on our rates to support the budget in September, and they will become effective in October.

Finally, I'd like to say a few words about our two affordability programs. In the District, many low income residents would pay more than 2 percent of their monthly household income - a threshold we watch closely - for their water and sewer bills. Through the Customer Assistance Program or CAP, the Authority provides eligible customers more than 2,500 gallons of water and sewer service each month at no charge. Since it began, participation in CAP has continued to increase. In FY 2010, a total of 6,458 households received a discount on their monthly bills. In February 2010, the Board expanded the CAP discount to include the Payment in Lieu of Taxes and Right of Way to qualifying low-income customers effective October 1, 2010. The District Department of the Environment, Office of Energy, establishes eligibility for this and similar programs for several other utilities in the area.

In addition, the Authority offers assistance to families in need through the Serving People by Lending a Supporting Hand program (S.P.L.A.S.H.), in times of emergency. The program is administered by the Greater Washington Urban League. Every dollar received by the Authority is distributed to eligible customers. We raise funds for this program primarily from customers rounding up their bills to the nearest dollar, but are exploring ways to generate even more donations in the future.

Finally, let me extend a word of thanks to you for your continued interest in our agency. We were delighted to host you and Mr. Conner at Blue Plains recently for a briefing that lasted several hours. I understand you needed to cancel your plant tour as a result of the potential government shutdown, but we look forward to having you visit again (and take a ride on our skimmer boats) sometime very soon.

This concludes my prepared remarks. I want to thank you again for the opportunity to testify, I have submitted written responses to your list of questions, and I look forward to answering any additional questions you or the other committee members may have.